Finance vocabulary Flashcards
Bear market
A stock market in which share prices fall precipitously, typically 15%-20%
Black swan
An event that is extremely hard to predict. Generally associated with Nassim Nicholas Taleb’s book. These events are typically random and unexpected, and some think the current financial crisis is an example.
Blue chip
The name given to a company considered to be large, safe and prestigious. Such companies are usually well-known, have a large market capitalisation and a good track record of dividend payments
Bull market
A market when prices roar ahead.
Chinese walls
A metaphor for the protocol that exists in financial institutions to insulate analysts from pressures from the deal-makers.
dead cat bounce
A term used by traders to describe a pattern wherein a spectacular decline in share prices is immediately followed by a moderate and temporary rise before resuming its downward movement.
Ebitda
stands for earnings before interest, taxes, depreciation and amortization. It is one indicator of a company’s financial performance and is used as a proxy for the earning potential of a business
futures
financial contracts obligating the buyer to purchase an asset or the seller to sell an asset, such as a physical commodity or a financial instrument, at a predetermined future date and price
golden handcuffs
What firms offer executives to stay in their job.
golden handshake
What many executives receive despite poor performance.
golden hello
What executives might be offered to tempt them to join a company
golden parachute
What executives get if the company gets taken over by another company.
insider trading
The trading of shares based on knowledge not available to the rest of the world.
Old Lady of Threadneedle Street
A name for the Bank of England dating back to the 18th century.
Poison Pill
A provision made by a company to deter takeover bids. The tactic works by making sure a successful bid triggers some event which substantially reduces the value of the company.
Ponzi scheme
the name given to pyramid selling in the US. It uses cash from new customers or investors to pay returns to existing investors. It does little legitimate business, but just recycles money. The scheme depends on a constant stream of new investors to fund the payouts.
poverty trap
A situation faced by low income households, when an increase in wages leads to a decrease in disposable income. This happens because the increase in income leads to a loss of government benefits or an increase in SEE taxation greater than the increase in earnings.
Square mile
Colloquial name for the commercial area of the City of London, which traditionally occupies the area north of the Thames between Tower Bridge and Waterloo Bridge.However, some financial institutions have left the area, with many spreading east to Docklands and hedge funds setting up shop in Mayfair to the west.
white knight
A company that is the target of an unwelcome takeover bid may search for a _________, an alternative bidder that is acceptable to it.
